VAT Registration for new companies UAE

VAT Registration for New Companies in UAE
Value Added Tax (VAT) was introduced in the United Arab Emirates on 1st January 2018 at a standard rate of 5%. It applies to most goods and services, with certain exceptions such as specific healthcare and education services. For new companies entering the UAE market, understanding the VAT registration process is essential for legal compliance and smooth business operations.

Who Needs to Register for VAT?
New companies in the UAE must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000 in the past 12 months or are expected to exceed it in the next 30 days.
There is also a voluntary registration threshold of AED 187,500. Businesses meeting or exceeding this limit can opt to register voluntarily, which can be beneficial for claiming input VAT credits and improving credibility with suppliers and customers.

Steps for VAT Registration in the UAE

1. Create an e-Services Account

   • Businesses must first create an account on the Federal Tax Authority (FTA) portal.

   • This requires a valid email address and other basic company details.

2. Gather Required Documents

   • Trade license

   • Certificate of incorporation (if applicable)

   • Passport copies of owners/partners

   • Emirates ID copies

   • Contact details of the company

   • Financial statements or expected turnover figures

   • Details of business activities

3. Complete the VAT Registration Form

   • Provide legal entity details, bank account information, and turnover figures.

   • Specify if the company is registering under a tax group or as a standalone entity.

4. Submit Application

   • Once the application is submitted, the FTA will review it.

   • If approved, the company will receive a Tax Registration Number (TRN), which must be included on invoices.

Benefits of VAT Registration for New Companies

• Legal Compliance: Avoids penalties for failing to register on time.

• Credibility: Registered businesses are seen as more reliable by suppliers and customers.

• Input Tax Recovery: Businesses can claim VAT paid on purchases and expenses.

• Smooth Trade: VAT registration can facilitate cross-border trade and partnerships.

Penalties for Non-Compliance
Failure to register for VAT when required can result in significant fines. The FTA imposes an AED 10,000 penalty for late registration, along with potential backdated VAT liabilities.
Why Seek Professional Help?
VAT laws and procedures in the UAE can be complex, especially for new companies without prior tax experience. Partnering with a leading accounting firm UAE like ANR Advisors ensures accurate registration, timely filing, and full compliance with FTA requirements. Professional guidance also helps in proper record-keeping and maximising allowable input VAT claims.
In summary, VAT registration is a crucial step for new companies in the UAE. Understanding the thresholds, preparing the right documents, and following the FTA’s online process can help businesses stay compliant, avoid fines, and build credibility from the very start.